Despite news of upcoming tariffs on imported vehicles, Tesla bucked the trend among automakers, seeing a slight uptick in its stock price.
On Wednesday, U.S. President Donald Trump announced that a 25% tariff would be imposed on foreign-made cars, set to take effect on April 2. Lee Ji Soo, an analyst at Korea Investment & Securities, concluded that this move would likely have a more significant negative impact on legacy automakers like General Motors and Ford rather than electric vehicle (EV) manufacturers such as Tesla and Rivian.
Among the companies covered by Korea Investment & Securities, General Motors has the highest proportion of North American production in Mexico and Canada (37%), followed by Ford (18%), while Tesla and Rivian stand at 0%.
Tesla had plans to build a Gigafactory in Mexico to produce its upcoming Model 2. However, the new tariffs could potentially complicate these plans. Instead of expanding production, the company has been optimizing its existing facilities.
Due to their relatively high degree of vertical integration, EV manufacturers, including Tesla, are expected to feel a more limited impact from the tariffs than traditional automakers.
Tesla manufactures high-value components such as batteries and gigacastings within the U.S., reducing reliance on foreign suppliers.
Although Tesla’s North American production is entirely U.S.-based, it still sources some parts from Canada and Mexico.
The company’s exposure to Mexican parts is estimated at 20-25%. Analysts also note the potential for tariffs on Tesla vehicles sold in Canada.
Tesla has a local factory in Berlin that sells European products. However, vehicles produced in China for the European market will be subject to tariffs. Lee believes these tariffs might give Tesla’s 100% U.S. production a competitive edge over its rivals.
If the 25% tariff on imported cars is implemented, General Motors and Ford could face estimated tariff costs of $7.16 billion and $2.74 billion, respectively, representing 57% and 38% of their automotive Earnings Before Interest and Tax (EBIT).
Tesla’s Model Y Juniper is expected to start deliveries in late February, potentially boosting sales figures from March onward. The full impact of new vehicle releases will be reflected in Q2 2025.
Overall, Tesla appears to be in a stronger position than its competitors. Tesla’s stock may benefit from other growth factors, including improved core business performance in the latter half of the year and the launch of unsupervised Full Self-Driving service in Texas this June, which could accelerate the company’s robo-taxi ambitions.
